FASTJET’S LOSSES HALVED FOR 2017 AS MANAGEMENT PAINTS ROSIER PICTURE FOR THE FUTURE
(Posted 29th June 2018)
Just in are the results Fastjet PLC has filed this morning, a regulatory requirement by the London Stock Exchange where the company is listed.
The report covers the financial year between 01st of January and the 31st of December 2017 and reads as follows:
Final results for the year to 31 December 2017
· Strategic and operational partnership agreed with Solenta Aviation Holdings Ltd;
· Purchase of fastjet brand from easyGroup, enabling future brand licence agreements and greater operational flexibility;
· Market entry into Mozambique via a brand license agreement with Solenta Aviation Mozambique; and subsequent MoU signed with LAM – Mozambique Airlines, S.A;
· Brand license agreement with Federal Airlines, giving fastjet access to an AOC for South Africa, to commence in-country services by early 2019;
· Board re-shaped and strengthened during the first-half of 2017;
· Fundraising of US$28.8m in January 2017 and US$44m in September 2017, reflecting ongoing shareholder confidence in fastjet’s strategy; and
· fastjet named Leading Low-Cost Airline in Africa at the 2017 World Travel Awards and Best Low-Cost Airline, Africa, at the 2017 Skytrax Awards.
Financial and Operational highlights
· Successful implementation of Stabilisation Plan comprising:
o Network rationalisation and right-sizing of capacity to better suit fastjet’s markets;
o Fleet transition to smaller E190 and E145 aircraft together with the planned introduction of three 70-seater ATR 72 turboprop aircraft during September 2018;
o Cost savings realised from supplier renegotiations and organisational changes following the relocation of fastjet’s Head Office to Johannesburg; and
o Additional revenue generating initiatives including introduction of a new Central Reservation System and improved travel agent distribution capability.
· The positive impact of the Stabilisation Plan helped fastjet to deliver:
o Operating loss down 61% to US$25.3m (2016: US$65.6m), after one-off costs of US$6.9m associated with an unexpected engine event and a US$2.5m bad debt write off;
o Revenue per seat up 30% to US$60.9 (2016: US$46.9)
o Load factor up 17 percentage points to 71% (2016: 54%); and
o Costs reduced by 48% to US$70.7m (2016: US$136.2m).
Nico Bezuidenhout, Fastjet’s Chief Executive Officer, commented as follows earlier this morning:
“In 2017, the successful implementation of our Stabilisation Plan saw us realign our network, withdraw from loss making routes, reconfigure our fleet, migrate the Group’s headquarters to Africa, and significantly reduce our cost base. These actions have resulted in a substantially reduced loss for 2017. The purchase of the fastjet brand from easyGroup in the second half of 2017 was an important milestone for the Company which has allowed us to explore new avenues for growth and given us greater operational flexibility, particularly in terms of the type of aircraft we operate. As part of our targeted network expansion strategy, the first fastjet branded flight in Mozambique took off last November and over the next 18 months we have a programme of further measured expansion of services in Mozambique and, subject to appropriate fleet expansion, new services in South Africa.
We are proud that fastjet has managed to restructure its operations in a relatively short space of time and simultaneously continued to provide our passengers with a truly excellent service.
Although the Group is operating on a more stable footing the Board has been reviewing further funding options. Over recent days we have made very good progress in discussing a further equity investment with our major shareholders, and the Board can confirm that it has received non-binding indications of interest from existing and potential new investors to invest, in aggregate, not less than US$10m, further details of which are expected to be announced today. Understandably this process has caused delays in finalising and publishing these results.
I am confident that healthy GDP growth, improved trading and expected passenger growth across our markets will all play a significant role in fastjet’s development during 2018. This, together with the planned introduction of our new ATRs, expected further network growth in Mozambique and the ongoing impact of the Stabilisation Plan, should enable fastjet to be cashflow positive during the second half of 2018 and will drive our continued progress as Africa’s leading low-cost airline.”
Fastjet’s report and accounts for the year ended 31 December 2017 (“2017 Report and Accounts”), notice of a General Meeting (“GM”) and the form of proxy are expected to be posted to shareholders on 30 June 2018.
A copy of the 2017 Report and Accounts will be available to view and download shortly from the Company’s website: www.fastjet.com
Meanwhile must it once again be said here that the reporting by some media over the past few days was less than professional, first playing up and then fueling even further speculation that the airline might have to close down as in a self fulfilling prophecy by prophets of doom.
The assurance by the airline’s CEO yesterday that operations would continue, was in some quarter dismissed as a mere face saving exercise or worse, an admission of some sort of guilt and in particular some competitors were putting on their dancing shoes for a celebration dance. Well, Fastjet continues to fly, this month again with a punctuality rate of over 90 percent, and doomsayers are encouraged to look for other victims of their acid spittle.